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February 26, 2013

These numbers are staggering to me. This is a geeky little blog about mobile, but after passing 3 million lifetime visits to this blog in July of last year, we have now passed 4 million cumulative, so the latest million came in less than 8 months. So the annual run-rate is already at 1.5 million visits per year, and the monthly rate is more than 100,000 of you visiting here monthly. Wow.

I know its mostly a loyal passionate readership, and the big interest and focus continues to be the smartphone races, especially Apple iPhone, Nokia, Microsoft, Windows, Android and Samsung fans and followers, with of course the other brands thrown in.

This blog was set up by Alan Moore and me to connect with readers of our books, in particular Communities Dominate Brands, the signature book for this blog, 8 years ago. I am so delighted to discover that people new to the book still find it exceptionally insightful and helpful - as the world's first business book on social media, after all, all the user-generated stuff and citizen journalism and all that. But obviously after Alan reduced his involvement in writing to this blog some years back, my focus has shifted ever more to my core competence, mobile, at the expense of social media topics.

I try to write broadly, and in mobile, to cover topics as wide as mobile money and SMS text messaging and m-education etc, but most of the hottest news the past three years has been - as I predicted - the heating war around smarpthones. When we started this blog, only 7 of the Global Fortune 500 companies were smarpthone makers. Today well over 20 of the biggest companies on the planet are fighting in this smartphone bloodbath - literally the most competitive global industry ever seen in human history. Smartphones turned near-bankruptcy Apple Computer into a 'mobile company' and the biggest profits of any company ever. Sony the biggest home electronics maker says mobile is 'front and center' of its future. Google the world's biggest internet company says the future of the internet is mobile as says Facebook the biggest social media company. Samsung the world's biggest tech company says mobile is central to its future, as says Intel the biggest chip maker and so said in the past Microsoft too, the biggest software company (not sure about the future now, with Bill Gates finding Microsoft's mobile strategy to have been a mistake). The BBC says all broadcast content will be on mobile, Electronic Arts says mobile is future of gaming, Warner Music says wireless is future of music and get this, Visa says mobile is the future of payments. Yes, money! Already 48% of Kenya's total GDP transits mobile phone based payments. Yes, 48% of the total Kenyan economy now goes through mobile.

Only now, to find that we have all these big brands getting into it at the OS level, with Mozilla Firefox, Samsung Tizen, LG-Palm, all vying to become the 'real' third ecosystem behind Google's Android and Apple's iPhone. Microsoft's Windows Phone will try to fight back, Blackberry's BB10 gives the Canadian business phone maker new life, and smaller players like Jolla's Sailfish and Ubuntu are also trying to climb into the race. And who knows, if the Nokia Board finally wake up and fire Elop, they would still own the rights to MeeGo, their 'next generation' OS they developed to replace Symbian, which powers some superb smartphones like the N9 and N950, and which had a broad manufacturer base to support it and could maybe be revived - even MeeGo powered laptops/netbooks had been launched such as the one by Fujitsu. Suddenly we have a lot more to monitor in this space. And I now am looking at this being the Bloodbath Year 4 - Smartphones Galore.

So I will continue blogging here, with my rambling long blogs (and until Elop is fired for incompetence, will of course rant from time to time begging him to be fired). I will monitor other developments in the mobile space and blog about those, and when my mood so hits me, look at other tech like say Augmented Reality. And on my occasional peculiarities, I will have coming in the near future also my review of Skyfall (I do want to let everyone who was interested have their chance to go see it, for my review here will be somewhat of a plot 'spoiler' so I don't want to ruin your 007 experience haha). I also have some cool pix coming at some point about a peculiar hobby I have relating to my alter-ego, Bond, James Bond. I will keep publishing industry stats here - many that you can't find anywhere else. And I will occasionally write just silly stuff that pops into my head. I am an unstoppable grumpy old man, nobody tells me to shut up haha, and this is my blog, my rules, my topics and my rants..

If you readers keep coming back and reading this blog, and keep leaving comments, I will keep writing more for you here. As always, this blog will never have ads (I get those offers ever week, I reject them of course) and I will not make you register and I won't harvest your email. This blog is not for sale, won't be for sale. This is only for us - you and me - to connect. I love my job, I get to live the life of the Digital Gypsy, the James Bond lifestyle (without quite the same level of the killing and explosions) and this blog is my digital home. Yes, I spend a lot of time on Twitter too, but this is where you find Tomi Ahonen raw and uncensorred what I think, what I really-really think..

Thank you for visiting this blog and please do come back. If you feel so inclined, from time to time, post your comment here, and if you want to get in touch with me, drop me an email to tomi at tomiahonen dot com. Four million visitors in eight years. I never ever EVER would have thought that possible. Thank you all.

So we have lots of news coming from Barcelona MWC (and to be clear, I am not there in person, I am monitoring via new sources). So its the Smartphone Bloodbath year Four: Smartphones Galore, and perhaps that should be 'Ecosystems Galore' haha.. The space in the OS wars keeps spreading. So lets cover a few big news items.

LG BUYS PALM FROM HP

So in ecosystem news, this is the biggest today. LG bought the Palm WebOS unit from HP. If you ever wanted to see whats next for Palm, if you thought WebOS didn't deserve to die, now it has a chance to come back. LG is not really big enough to go it alone, they need now partners to provide handsets, but where LG bought its own OS, is a clear sign LG wants to be seen as a top-tier smartphone maker with its own OS, like Samsung, Apple, Blackberry, Google/Motorola (and until recently also Nokia). And thus separate itself from the second tier makers like Huawei, ZTE, Sony and Lenovo (and now also Nokia) who are totally dependent on others for their smarpthone destiny.

Two interesting developments - how long until first LG 'Palm' device is announced & released. They might be able to do it in 15 months, with Korean efficiency and 'balli-balli' philosophy or hurrying-hurrying... So first LG phones with WebOS out perhaps in summer 2014, and the hype to start around end of year 2013. What LG would dearly love, is to find a few hardware manufacturers to commit to WebOS. Remember, this was once rated as good as the then-current iPhone and iOS platform (3 years ago). So LG does gain a potentially competitive platform, but they must find partners to make the ecosystem play work. LG is no Samsung (or what Nokia was) in scale to be able to support an OS just by its own sales - like Sammy did with bada in the past few years.

FIREFOX SPREADS

And Mozilla's Firefox OS is now blasting the industry with an ever more impressive lineup of carriers (they had plenty of those already) and now, many handset manufacturers. At MWC we've already heard that Huawei, ZTE, LG and Alcatel will provide Firefox handsets - this year. Huawei is the world's third largest smarpthone maker, ZTE and LG are Top 10 makers, so Firefox now has a nice portfolio of handset makers in its stable. The little fly in the ointment is that LG just bought Palm, so don't expect LG to fully ever embrace Firefox, but early on, even one LG phone is good enough for Firefox to claim 3 of the 10 largest handset makers supporting their OS.

The main points with Firefox lie in 'how mobile' is the OS. Mozilla is an internet company, we've seen what mistakes for example Microsoft had made, time and again, taking USA West Coast lessons and attempting to force those into its mobile strategy (a strategy Microsoft Chairman Bill Gates has just admitted last week that it has been a mistake). A first-edition OS is rarely solid and complete. Firefox will be compared to Tizen, which builds on the hugely admired and beloved MeeGo OS by Nokia and Intel, the only OS that ever was consistently rated better than the iPhone. If you take that, MeeGo, already better than the iPhone, and now evolve it further, combining Samsung's bada competence and knowhow into the MeeGo project, with Intel's Moblin background, expect Tizen to be the most complete and 'mobile' of any new OS this year - and the one rated by all analysts as 'by far' the best. And Samsung is trying to find the same handset maker ecosystem to Tizen with Huawei there already plus Panasonic and others. So for a Huawei, who already does Android, if the Tizen OS is proven to be far more robust, advanced and complete, than Firefox, we might see Huawei preferring Tizen over Firefox. But we don't know, and the operators/carriers will have a lot to say on which OS and which manufacturers they decide to support... Still, Firefox is moving into a strong challenger position now with the impressive supplier lineup.

TIZEN PHONES OUT IN JULY

Samsung is promising first Tizen phones as early as July or August and saying there will be several this year. Much of what I think was in the above paragraph, Tizen will be a success simply on Samsung's own push alone, and will be bigger than say Windows or Blackberry in two years, simply because Samsung will promote it as one of its OS platforms (and migrating/converging bada into Tizen). What Samsung and Intel need with Tizen is then many handset makers and carriers/operators embracing the OS, which is likely to be easier than Firefox, where carriers/operators like NTT DoCoMo for example are on the Tizen Board, and the legacy of the OS, being an upgrowth of something very well mature, developed, and highly competitive if not supreme to other OS platforms. Expect a lot of the tech buzz this year being between Tizen and Firefox

WINDOWS NO TRACTION

And yes, we heard last week Bill Gates admit that Microsoft had seen the smartphone revolution, was in it early, but the strategy they adopted had prevented Microsoft from gaining scale. Windows Phone has failed and Bill Gates used the words it is a mistake. Now we heard last week (before the Palm purchase) that LG for example said, they will not bother to make more Windows based smartphones until there is some demand by carriers/operators. Obviously the carriers/operators do want a third ecosystem, but after two years of Steve Ballmer and Stephen Elop hard-selling Windows ("with Skype included, of course") at the operator/carrier community, with the biggest marketing budgets ever, the overwhelming response by the carrier community is rejection. Yes, they'll take the money, then not sell the phones. The Windows strategy is dead. But its no surprise to my readers, I told you so. And now, once again, we hear from yet another Windows partner - LG says there is no traction from carriers.

NOKIA CLAIMS ITS NOT ME-TOO

Elop continues to play the Bush-Cheney strategy. Look at blatantly obvious facts and steadfastly simply deny deny deny. In January 2011, just before Elop announced his mad Microsoftian strategy, Nokia had the most differentiated smartphone strategy on the planet. It had smartphones with the best camera on the planet (N8) - far better than what Apple offered on the iPhone. It had smartphones with full QWERTY keyboards similar to Blackberries - something Apple refuses to offer. It had touch-screen and QWERTY slider hybrid phones like the highly praised E7, the latest 'communicator' a model of smartphones far more expensive than the iPhone, with astonishing tech that the iPhone didn't match, and yes, a QWERTY slider in addition to the touch screen. Nokia offered the most open ecosystem, something Apple didn't, and had the most connectivity from FM radio broadcasting to NFC to microSD slots to unrestricted Bluetooth - things again that Apple's iPhone didn't offer. In January 2011, Nokia was THE most 'not me-too' smartphone maker on the planet, selling smartphones far more expensive than the iPhone to smartphones far far FAR cheaper than the iPhone.

Now we have seen 11 smartphones launched in the Lumia series. Not one of them has a camera that even matches the N8, or is anywhere near the best in the world today (Nokia's Symbian-based 808 Pureview, launched last year). Nokia is now in the same 8mp class as.. the iPhone. Nokia abandoned its QWERTY advantage, even as more than 1 in 4 smartphones sold by Nokia (and many more dumbphones) had QWERTY and Nokia would have a huge loyal customer base eager to buy one, yet of the 11 Lumia phones so far, not one has a QWERTY or hybrid with QWERTY slider/folder. Nokia had the most open ecosystem and was far beyond Apple, today it uses Windows, the only ecosystem on smartphones more restrictive than the iOS !! And what of connectivity? Yes, some Lumia series have been adding some connectivity options but many in the series are as unconnectable as the iPhone, and none are as broadly connectable as say the Nokia N9 (running MeeGo) or the Nokia 808 Pureview (running Symbian). So in reality, every Lumia is ever increasingly like an iPhone, often a more cheezy plasticky version, but all are same form-factor, thin slab touch-screen only large screen smartphones - similar to iPhones. Nokia abandoned all its differentiation opportunities and is purely now a 'me-too' provider. If you wanted an iPhone with some more colors, there is Lumia. Or if the iPhone is a bit too expensive, but you'd like a new phone that is very much like an iPhone from two years ago, Lumia has some cheap versions in some cheesy colors to let you have that. i-Phon-a-clones is what I call them. Elop clearly has made Nokia into only a me-too provider, abandoning markets worth millions of sales per quarter, and regions where other form factors are highly praised, in his search to try to make his Lumia company look exactly like Apple iPhone (minus the loyalty, minus the revenues and minus the profits, obviously).

But it should tell you something about how deluded Elop is, that he gives an interview promising Nokia is not a 'me-too' smartphone provider. He is delusional, that means madman. That means, he looks at reality, refuses to see facts, and substitutes his own imaginary world in the place of reality. That is delusion. That is what Nokia CEO proves to us, when he claims Nokia is not a me-too company, when Elop's own actions abolished all major differentiation abilities. Don't expect Nokia to recover from this madman (and why is Elop allowed to continue to ruin this company. The only reason the handset unit 'generated a profit' in Q4 was because Elop sold the HQ building and then attributed all its revenues to the handset unit, rather than accross all Nokia divisions evenly. Now he's sold the Nokia Oulu technology campus in Finland, is that so he can create another fictional profit for his handset unit for Q1?)

By the way, did I tell you its all about the retail distribution/carrier relations? Here is Stephen Elop yesterday in YLE interview (Finland's biggest broadcaster) and its short English version news item - what does Elop complain bitterly about - once again - its the lack of sales support to his beloved and so utterly doomed Lumia phones. The market says loudly 'we do not want it' and refuses to sell it, but Elop keeps spending money to do new 'me-too' variants of Lumia, rather than abandoning Windows like the channel wants, and get sales growing again for Nokia. When Elop took over, Nokia sold 34 million smarpthones per quarter. In its latest results, Nokia sold 6.6 million smartphones in the quarter. That, my dear readers, is market failure. Its not because the phones are miserable with exploding batteries and antennagates and lack of apps, its because the retail channel says - no way. We will not support this platform. Elop heard this in 2011, he admitted it to the Nokia shareholders in May of 2012 and now its February 2013, and Elop cries the same song once again 'my retail sales guys are not selling my phones....' - get over it Elop. Windows Phone is dead. The sooner you quit the dead platform the sooner Nokia can start to recover.

JOLLA COMING

We are expecting news from Jolla and sailfish, it might be the coolest must-have phone of the year when it launches. But so far, nothing yet. Hopefully we'll learn soon

SONY NEEDS MOBILE

Sony CEO Kazuo Hirai said in an interview for the BBC that mobile is 'front and center' for Sony's consumer electronics business. Also that Sony had strong assets it could and would use to be one of the biggest players in mobile. Sony is currently a Top 10 sized smartphone maker and currently offers only Android based smartphones (left the Windows ecosystem after the carrier boycott relating to Skype). Now I would expect the delegations from Tizen, Firefox, LG/Palm, Ubuntu and Sailfish are making regular pilgrimages to Tokyo to try to bring Sony to their camp.

BB10 MIXED NEWS

Blackberry (ie the company previously known as RIM) is receiving mixed news in the first quarter of sales for the BB10. In some news the phone is highly desired and selling very well, in some other news the response has been lackluster. It will be interesting to see what kind of results we get when Blackberry reports this quarter sales in March.

February 20, 2013

So who's your daddy in mobile numbers? Lets look at the
forecasts made about Windows Phone, after the Nokia-Microsoft partnership was
announced. If you remember, I recently examined the accuracy of the Nokia forecasts made (and found that I had once again been the most accurate forecaster in mobile. But will that reputation hold through this, very challenging Windows Phone forecasting conundrum?)

When the world's largest computer software company has said
that the future of computers is mobile, and then sees its position in software
for mobile phones (ie smartphones) fall from 12% and second biggest to 2% and
6th in the market - and at that point, promises to grow back to a 'third
ecosystem' - it is either being brave with a cunning plan, or being foolish
with forlorn hope and hype.

SELLING THE DAYDREAM

But it is the corporate CEO's job to sell new strategies to
investors and partners. It is the analyst's job to evaluate that prospect - and
to give guidance on how it might pan out. Nobody can ever guess perfectly what
happens in the future, but a good analyst makes forecasts that are close to the
truth - and less wrong than forecasts by others. That Steve Ballmer of
Microsoft and Nokia's new CEO Stephen Elop were peddling silly stories of
Windows becoming a 'third ecosystem' - they should not be faulted for that (but
they should be held accountable for what they achieved). A CEO should project
optimism about his company and its products and its future (compare to say,
Burning Platforms memo by Elop). The test of the analyst is to see who drank
the cool-aid on silliness and who saw through the bullshit and told the truth.
So lets examine forecasts made about Windows Phone for 2012. First, the
reality. This is what Microsoft's Windows smartphone sales looked like in the
recent past when the forecasts were made, so you have some context:

This was at a time when the global smartphone market more
than doubled in size. Microsoft achieved that underwhelming performance, even
as its Windows based operating system was supported by six of the ten largest
smartphone makers at that time - Samsung, HTC, LG, SonyEricsson, Motorola and
Palm.

But Nokia - Microsoft's new partner (and not just 7th of the
10 largest smartphone makers, at that time the largest manufacturer), sold
103.6 million smartphones during 2010, using its own operating systems, Symbian
and Maemo. The new CEO, Stephen Elop, promised to migrate the user base
(intending to achieve the transition at the rate of 1-to-1 in fact) to Windows.
If this golden fairy-tale could come true, theoretically, the Nokia+Microsoft
marriage could perhaps produce sales of 119 million smartphones per year which
should all be Windows based by the end of 2012/early 2013, when this transition
was to be completed. 119 million smartphones sold in 2012 would give you 17%
market share. That was the 'promise' of this partnership.

However, both Nokia and Microsoft messed up (one might use a word more
appropriate, that rhymes with plucked up) this opportunity royally, from the
very start when Elop released his destructive Burning Platforms memo, to when
Microsoft purchases Skype and angered the carrier community, to the faulty and
poorly-designed Lumia series of smarpthones that were then launched to try to
dupe customers into accepting Windows with Nokia, to the denial of a migration
path for current Lumia owners into the new Windows Phone 8 environment by
Microsoft. The whole strategy, flawed as it was, has been then executed
miserably, to pitiful results. We all know the results. IDC just reported for full
year 2012, Microsoft managed to sell 17.9 million smartphones (and by their
calculation, Microsoft landed with 2.4% market share for the year). Gartner
counted a bit less, found Microsoft with 16.9 million smartphones sold in 2012,
but as their total for the year was also less, Microsoft's market share was a
sliver better, at 2.5% for the year.

So we know it failed. But what about those forecasters two years ago? Lets
examine how well the analysts saw through the Microsoft smoke-and-mirrors and
Nokia's new miracle-cure salesman CEO. To get the number we will use as the
benchmark, lets take the average of the two published numbers Gartner and IDC, to
find the very close to truth number, which is 17.4 million Windows based
smartphones sold in year 2012.

FORECASTS BEFORE ANY DATA WAS AVAILABLE

Then lets turn to the analysts. From February 11, 2011, when Nokia and
Microsoft announced their partnership, to November 2011 when Nokia released its
first Lumia series smartphones running on Windows, there were six major mobile
industry analyst houses that released a forecast for Windows Phone sales into
2012. They were IDC in March, Gartner in April, Pyramid in May, MIC in June, my
consultancy, TomiAhonen Consulting in July, and Strategy Analytics in October.
This is what the forecasts looked like:

Source: TomiAhonen Consulting summary from public source
analyst press coverage and industry data
This table may be freely shared

Note the forecasts without asterisk gave a distinct number of smartphones sold
in 2012, the ones with asterisk gave a market share number, which I have
converted now to a number, as we know the final sales of smartphones in 2012
globally was 695 million units. My rival 'experts' are in red. The real
Microsoft performance is in blue. My forecast is in yellow.

So? I was off by 111%. That might seem awefully bad forecasting, until you see
that the next most accurate forecaster, IDC, was off by 283% and Gartner, next,
was off by 292%. Even as I was off by one whole measure, my accuracy was still
more than twice as good as the next best analyst who was off nearly 3 times
from the reality. Then look at the others. Strategy Analytics was off nearly
4x, at 397% error. MIC was off by 571%. And Pyramid - the most ludicrous forecast
perhaps of all time in mobile - was off by over 1,000 percent !!! (I did warn
readers when the ridiculous Pyramid forecast was published, that it was based
on so many faulty data points, it could not possibly bear any resemblance with
reality. Like I said back then, it is a disgrace and Pyramid should apologize
for that ridiculous forecast and fire the 'expert' who produced that outrageous
projection).

REVISIONS WHEN DATA CAME IN

So then, we have data that came in as the first Lumia smartphones were launched.
Remember the flawed first flagship, the Lumia 800, that was plagued with
hardware and software bugs. The alarm clock that didn't wake up, the time zones
that didn't recognize Nokia's home country of Finland, etc. And the immediate
price cuts. The smartphone with the infamous 101 faults list of problems that
traditional Nokia smartphone owners would grow to hate. The smarpthone that
achieved a Nokia record for returns and an instant resale value collapse
approaching zero. This where carriers and customers craved for the hugely loved
award-winning Nokia N9 instead, running MeeGo. Many European carriers said the
Lumia with Windows Phone was not suited for the mature experienced tastes of
the European customers who were not new to smartphones (like American consumers
were). European carriers begged for Symbian based smartphones instead from
Nokia.

Then we had the first revised Lumias, led by the new flagship Lumia 900. Now
Nokia was supposed to win over America. The flagship plagued with software
bugs, and a badly timed launch. The notorious 101 faults list was expanded to
121 faults. Then the consumer survey of US buyers of the Lumia by Yankee Group
found that four out of ten buyers rated it the worst phone they had ever seen. Meanwhile
store sales surveys found that sales reps who had the Lumia in stock would
refuse to show it to customers asking for Lumia by name it was that much hated
by sales reps for the high return rates. Nokia sales plummetted, the prices
were slashed, and Lumia reputation was in tatters. Many carriers refused to
carry the Lumia 900 altogether, but the parallel 808 Pureview running Symbian
could not keep up with demand and propelled Nokia's 'obsolete' Symbian platform
to outperform Windows Phone once again. And suddenly Microsoft Osborned all
existing Lumias by forbidding any upgrades from Windows Phone 7.5 to Windows
Phone 8.

Then we had the third attempt by Nokia to relaunch the Lumia, led by the new
flagship Lumia 920 that was supposed to bring Nokia back in China, the world's
largest smartphone market. Still, by Christmas of 2012, the Nokia flagship had
a camera that was bested by the Symbian based N8 from three years before. The
Lumia 920 stole the name 'pureview' from the 808 without bothering to take the
technology, causing severe disappointments to buyers. The consumer survey by
Bernstein of smartphone loyalty found that two out of three Windows Phone
owners were so disgusted by their new device, they would never buy another
powered by Windows Phone. The new Windows Phone 8 based Lumia series was sold
in tiny numbers before Christmas, then missed the gift-giving season for
Chinese New Year, and saw an instant price collapse.

That is the reality of Windows Phone with Nokia and Lumia. Some of that reality
was obvious by the first phones when they were released. So what does an honest
analyst do with his or her forecast? When the facts change, you change your
forecast accordingly. That is what honest analysts do.

Who did that? MIC revised their forecast (downward by 23% in January 2012). IDC
revised their forecast (downward by 46% in June 2012). And TomiAhonen
Consulting, of course, me, I revised my forecast (downward by 40% in May of
2012).

Note first - that Gartner, Pyramid and Strategy Analytics - were content to
leave their outrageously faulty forecasts to remain as their opinions of how
Windows Phone would sell in 2012, all through 2012. I think this speaks very
poorly of their mobile competence.

Then about MIC, IDC and me. Yes, good for you, MIC and IDC that you downgraded
your Windows Phone forecasts during 2012, as the facts came in and your first
projections were clearly overly optimistic (as was mine). But did you inform
your customers that you had downgraded Windows Phone forecasts? No. You did it
without any mention. No explanation at all. Just that the new forecast issued
in 2012, was MASSIVELY smaller than the one you had released the year before. I
think this is not professional behavior. A professional forecaster explains why
his or her forecast is changed. What caused the change. As I did on this blog,
of course, in May of 2012.

SHORT-TERM FORECAST ACCURACY FROM EARLY 2012

But that is not all the forecasts we had for Windows in
2012. We've actually had three new forecasts for Windows Phone for 2012 (in
addition to those three revised ones) issued by June of 2012. (I am closing the
timing for these forecasts in June. Why? Because we are forecasting year 2012
sales, and by July there will be two full quarters of sales for the year 2012 reported.
So then its no longer a complex forecast to guess what the second half of the
year will be and what level Windows might end up with in 2012. So I am cutting
off the forecasts in June.)

So here are the forecasters with Windows Phone forecasts made in 2012 up to
June. They are Morgan Stanley, Credit Suisse and IHS in January. Plus the three
revisions, MIC in January, my TomiAhonen Consulting revision in May, and IDC's
revision in June. This is the accuracy of the Windows Phone forecasts made
during the first half of 2012, for how Microsoft Windows Phone sales will end
up for the year 2012:

Source: TomiAhonen Consulting summary from public source
analyst press coverage and industry data
This table may be freely shared

IDC's revised forecast was now far more accurate, they are off by only 108%
from reality. But note, theirs was a revision and done last in this series,
you'd expect it to be one of the more accurate ones. Morgan Stanley did a very
good job back in January with an error only of 147%, would have been second most
accurate forecast up to that point (second only to my original forecast in mid
2011). iHS was off by 259%, while Credit Suisse was off by a very sad 419%. And
what of MIC. They took their 2011 forecast which was off by 571% and managed to
'correct' that to one that was off 'only' by 419%. Pathetic in terms of a
correction and accuracy.

WHO IS MOST ACCURATE FORECASTER IN MOBILE (ONCE AGAIN)

What of the most accurate forecaster in mobile? After I saw what the first
Lumia was like, I of course downgraded my forecast and said in May of 2012,
that Windows Phone would sell 22 million total smartphones in 2012. While that
was still off by 26% - Windows Phone only managed 17.4 million - I was four
times more accurate than the second most accurate forecaster in mobile, IDC
(revised forecast from June 2012).

So who's your daddy? These forecasts were made here on this blog, out in the
open, clearly warning the industry, that the Windows Phone 'strategy' was
doomed and untenable. Now we have heard from no less than Microsoft Chairman
Bill Gates himself, admitting that the Microsoft smartphone Windows Phone
strategy has failed. He used the clarifying term 'clearly' failed. There is no
question this is total failure. And Bill Gates admits in his Charlie Rose
interview that this strategy is also fundamentally flawed in that it is
incapable - the strategy is incapable - of achieving leadership for Microsoft.
And yes, this is what misery or 'clearly a mistake' looks like:

Source: TomiAhonen Consulting from public analyst and
industry data
This table may be freely shared

Yeah, I told you so... You could listen to Gartner or IDC or iHS or MIC or
Strategy Analytics or Morgan Stanley (or god forbid, Pyramid) and be misguided.
Or you could follow the consistently most accurate forecaster in mobile, the
author of 12 books on mobile, the man who is less wrong than others, and more
often right than anyone else, in predicting this industry's future. Yeah, its
nice to gloat for once, after all the shit I've taken on this blog by the
Microsoft trolls who came here to ridicule me over the past two years. Well
whose laughing now? Go ask Bill Gates if Windows Phone can ever become the
'third ecosystem' in mobile.

February 19, 2013

Did you see what Bill Gates, the Chairman of Microsoft, ex CEO of Microsoft, and until he retired from actively managing Microsoft, the world's wealthiest man, said about the Windows Phone strategy just now?

(note - I added the transcript to the end of this blog, as there are some Microsoftian trolls who are trying to spin it as if Gates was talking of past Windows Mobile not the current Windows Phone strategy - which he clearly was when you see the video or read the transcript.)

Nokia and Microsoft had a combined 38% market share in smartphones in year 2010, before the Nokia+Microsoft partnership was announced. Nokia was the world's biggest smartphone maker using its own operating systems. Nokia towered over its rivals in ways that Toyota, General Motors, Fiat, Volkswagen etc could only dream of in cars, or in ways that Hewlett-Packard, Dell, IBM, Apple and Compaq had never felt possible in their industries, yes, Nokia was more than twice as big as its nearest rival - and profitable - and growing faster than its rivals like Apple and Samsung! Yes. True. The numbers don't lie. Who is that strong, they grow more than Apple or Samsung in smarpthones globally (and doing this with increasing profits?)Nokia thats who. Nokia just before the crazy Microsoft 'strategy'.

WORLD RECORD FAILURE

Nokia's new CEO, Stephen Elop, came from Microsoft and threw that massive growing success away - yes, Nokia grew - GREW - smartphone unit sales by 53% in year 2010 (Nokia just shrunk smartphone unit sales by 55% in year 2012) - and grew revenues by 17% in year 2010 (vs shrinking revenues by 50% in 2012) and Nokia generated 11% profit in smartphones in 2010 (vs 29% loss in the smartphone unit in 2012). Nokia has tumbled from being by far the biggest smartphone maker on the planet to now ranked 10th by Q4 of 2012. This was all done by the sudden shift away from the world's most used - and bestselling - smartphone platform to that of Microsoft, Windows Phone, which was the 7th out of 7 platforms, that had a 2% market share at the time.

Now that Nokia-Microsoft partnership has had 2 years to get its act together. Nokia has spent the world's largest launch budgets ever, to launch the Windows Phone based smartphones on its Lumia series. Many of the operators/carriers that helped launch the Lumia series, like AT&T in the USA, had also thrown the biggest marketing push they ever had, into this launch. Meanwhile Microsoft literally threw more Billions at the launch, including giving away free Xbox 360 game consoles to buyers of premium Lumia handsets in some markets. The launch push by Nokia and Microsoft and carrier partners is the biggest bash ever seen in the mobile industry history. Where does it get us today? Nokia's market share has collapsed from the 35% it was in year 2010, to 3% it is as of Q4 of 2012. Yes. Nokia has lost almost 11 out of every 12 customers it had, in only 2 years - this is by far a world record in market destruction by a globally leading brand. A world record in failure.

And what of Microsoft? The Windows Phone platform had 2% market share before this partnership was announced (Microsoft also had its older but incompatible platform Windows Mobile which had also about 2% market share). Now we have had the world's most expensive new product launches in mobile, and the world's largest handset maker has migrated essentially all of its over 100 million sales per quarter level of smartphone business to this Windows Phone platform. What was the gain to Microsoft? If you take 35% market share and shift it to your product, surely most of that succeeds? Or half of it succeeds at least? If your product is reasonably competitive and desirable, at least a third of it succeeds? How much has Windows Phone gained from this partnership? Try nothing.

The end-of-year stats for smartphone OS sales for year 2012 are in. Windows Phone has managed to sell 2.4% of all smartphones according to IDC, and 2.5% according to Gartner. By demolishing Nokia's massive market standing, sacrificing Nokia's globally dominating smartphone loyalty, wiping out all of Nokia's smartphone future, Microsoft's Windows Phone has managed to eke out half a percent - HALF A PERCENT - of market share over a two year period of this 'partnership' ??? The market is comprehensively rejecting the new Microsoft Windows Phone based smartphones by Nokia. Out of 20 customers Nokia has tried to migrate from its own platforms to Windows, 17 have run away to the happy hands of competitors. 2 out of the three that took the plunge, hate the Lumia and Windows Phone smarpthones so much, they will never buy another. Only one in 20 attempts results in a satisfied customer. (at that level, its probably the family of Nokia and Microsoft employees who is left). See the migration failure analysis here in its gory details.

WE KNOW WHY

There is a reason why the Windows Phone ecosystem cannot succeed. We heard the explanation by Nokia's CEO Stephen Elop himself, in May of 2012, when he confessed to the Nokia annual shareholder meeting, that carriers hate Windows Phone because Microsoft bought Skype. Carriers/operators fear Skype, Elop explained its because Skype threatens the revenues carriers make out of telecoms traffic - the latest TeleGeography stats tell us that a third of global international voice traffic and under Microsoft's ownership, Skype has grown a massive 44% in size in the past year. Elop was so explicit in describing how much carriers hate/dislike Microsoft because of Skype, Elop used the words 'of course' - it is something everyone inside the industry knows. Elop further articulated that many carriers now refuse to sell any Windows Phone based smartphones (not just those made by Nokia). This is what Nokia's CEO told the Nokia shareholders meeting in May of 2012.

Its not just Nokia. Look at the Windows partners back then. LG quit Windows Phone altogether. So did SonyEricsson. So did Motorola. So did Dell (they later quit the whole smartphone business). Samsung launches its own new Tizen OS. Huawei also joins Tizen this year. ZTE launches on Firefox. HTC has reduced its emphasis on Windows Phone to a pittance. Nobody - except idiot Nokia CEO - even bothers to push Windows today, why? Elop told us - because the carriers hate it and won't support it. Why oh why oh why oh why, why would any sane CEO fight against this torrent of hostility? Any sane person would have known by May of last year, when Elop confessed carriers hate Windows Phone, that this Windows Phone strategy is a failure, and cannot succeed. Any sane person saw that then.

NOW BILL GATES TELLS US THE TRUTH

Do you need more proof? I cannot find a more eminent, more insightful, more intelligent, more competent expert on what is ailing Microsoft's strategy, than Microsoft's Chairman, former CEO, formerly world's richest man, Bill Gates. Bill Gates was on Charlie Rose on CBS just yesterday, and said that the Microsoft Windows Phone smartphone strategy has failed. Bill Gates puts it this plainly, he uses the term 'clearly' in describing the failure. Bill Gates said "The way we went about (our smartphone strategy with Windows Phone) didn't allow us to get the leadership, so its clearly a mistake."

I HAVE TWO POINTS TO MAKE

One. Bill Gates the Chairman of Microsoft says there is no doubt whatsoever about is the current Windows Phone smartphone strategy by Microsoft succeeding to any possible degree. It is not. Bill Gates says it is 'clearly' a mistake.

Two. Bill Gates, the Chairman of Microsoft says that the current Windows Phone based smarpthone strategy by Microsoft is failing because "it didn't allow us to get the leadership". He knows this strategy will be rejected by the carriers, and the Windows Phone 'third ecosystem myth can never be realised. Bill Gates tells us Windows Phone cannot succeed in achieving leadership. It is 'clearly' a mistake!

YOU KNEW IF YOU READ THIS BLOG

Bill Gates tells the world now, in February 2013, that the Windows Phone strategy for Microsoft has 'clearly' failed and cannot succeed, ever. That may be a shock to some. Not to my readers on this blog. I have told you so on this blog, ever since Microsoft bought Skype in a year and a half ago, that the strategy was doomed. It is no secret! Even ex-Microsoft Windows Phone execs admit to it! Now we have the evidence. Now we have the clear statement by Nokia CEO to Nokia shareholder meeting that yes, Skype is the very reason why carriers won't help Nokia win in smartphones with Windows. And now, Microsoft's own Chairman admits, that while his appointed replacement as new Microsoft CEO, Steve Ballmer, has done many things good with Microsoft like Bing and Xbox and on the desktop, Windows 8, yet the smartphone strategy on Windows Phone was 'clearly' a mistake and that it cannot ever succeed in achieving leadership. It is fundamentally flawed. It cannot succeed.

(and I was right, right from the start, I saw this coming. Microsoft and Nokia DID have a chance, until Ballmer bought Skype which torpedoed this partnership and the chances for Windows Phone have been doomed since June of 2011. I told you so, ex-Microsoft execs have told you so. Nokia's CEO has told you so. Now Microsoft's Chairman tells you so. What more do you want? Nokia! If Bill Gates - the Chairman of your partner company Microsoft now says this strategy cannot succeed, why on earth, would you even CONSIDER continuing on this doomed path?The Road to Certain Death?)

(and yes, I did explain that the Windows Phone strategy is doomed, it cannot succeed anymore. I've also explained how this contest for smartphone leadership was the battle of the digital future that Microsoft has now lost (and was won by Google and Android). I've explained it till I was blue in the face, yet there were all those who came here to claim I was mistaken. So now, we have Bill Gates himself admitting the Windows Phone strategy is 'clearly' a mistake. I think this matter is now closed. The only question remains, why is Elop allowed to remain in charge and pursue this mad direction for Nokia?)

Nokia Board! How can you be asleep at the wheel? How can you let the clown in charge of Nokia, Stephen Elop, continue with his mad Microsoftian Misadventure, the biggest market failure not just in the global handset industry - but any industry, ever! This is a bigger market disaster than New Coke. Worse than the Mercedes A-Series. Worse than the Ford Edsel. Worse than Toyota Brakes. Worse to Nokia's market position than the damage done by Exxon Valdez to Exxon or the Deepwater Horizon oil spill to BP. Elop has inflicted upon Nokia the worst disaster ever by any CEO, and is still insisting on continuing on the strategy that Microsoft's Chairman says is doomed. That is 'clearly' a mistake! Why is Elop allowed to continue? Elop must be fired, now! And any Board member who votes to extend Elop's tenure, must be fired for collusion or incompetence. If your partner Chairman calls this strategy 'clearly a failure' then Nokia, you MUST accept it is failing. All the evidence is clear that this is a colossal, gargantuan, unprecedented distaster in corporate management.

Fire Elop now!

PS - reading the tea-leaves. So if Microsoft Chairman, Bill Gates, when he was still CEO of Microsoft and Windows Mobile had 12% global market share of smartphones as truly the second largest ecosystem out there behind only Nokia at the time, is now finding the share down to 2.5% and still shrinking - is it just me, or is this an early sign that Microsoft will soon end the costly Windows Phone folly? I think Windows Phone might soon go the way of the Kin phones and Zune players... Don't be surprised if this silly experiment is brought to an end suddenly by a decree from Redmond.

That combined with Elop has started to talk about Windows Phone not being inevitable, that Nokia could do Android in the future. And the recent hiring of Android competence to Nokia. And that the still 10% Nokia-owned luxury phone brand Vertu just released its first post-Symbian smarpthones - not running Windows Phone, but running.. you guessed it - Android. I think it is inevitable that Nokia (in whatever form it may exist) will abandon Windows Phone soon and then its obvious option is Android (would have been MeeGo).

I think we are seeing the early moves in that direction, even when we look at Ballmer with the Surface tablet and openly saying he may release smartphones to run against Nokia's Lumia directly. I think everyone sees the writing on the wall by now. Except the Finnish press and Nokia shareholders and the Nokia Board? If Bill Gates says this strategy is 'clearly' failed and cannot succeed ever in becoming a leader - why would you believe in the fairy tales told by a serial liar, Stephen Elop? Isn't it time to wake up to the truth?

UPDATE WITH TRANSCRIPT

So yeah, now the trolls are at it, on Twitter and even on this blog. Microsoftians in panic, how can Bill Gates tell the truth about this? Either Bill Gates is wrong, or Tomi Ahonen has been right all along. Windows Phone strategy IS failing.

....no, actually. Bill Gates actually says more explicitly, it is 'clearly' a mistake and the Microsoft approach to mobile PREVENTS the ability to gain market leadership. It CANNOT succeed.

And yes, this is the follow-up to today's biggest tech story, that Bill Gates admits the Microsoft smartphone strategy around Windows is dead in the water, it is 'clearly a mistake' and cannot succeed. The story is getting due reference in the media, many tech sites are carrying the story, and even mainstream media are picking it up like the Guardian, Huffington Post etc.

But now, yeah, now there are Microsoft trolls, even the MSN network trying to spin Bill Gates's words as if he was 'only' talking of the past and not today. No no no no NOOOOO no. You don't get to do that, not on my watch, not in mobile, not in my backyard. Lets go to the transcript. Charlie Rose asks Bill Gates about the condition of Microsoft today, after Gates stepped down as CEO and Ballmer took over. The questions are about Ballmer's stewardship and the current condition of Microsoft, not the distant past when Bill Gates was in charge. This is what Charlie Rose and Bill Gates on the interview broadcast by CBS yesterday morning (transcript by me from CBS video, any mistakes in transcribing are mine):

Rose - Every time you seen an article about Microsoft its not so much about the success of Surface of Bing, it is about what happened at Microsoft, or five things that you ought to do for Microsoft, when you see all this stuff, what do you think?

Gates - No, we appreciate the advice (laughter). There is a lot of things like cellphones, where we didn't get out and lead very early.

Rose - Why not, did you just miss that?

Gates - Oh, thats too complicated.

Rose - Did you miss the cellphones, did you miss search?

Gates - No we didn't miss cellphones, but the way that we went about it, didn't allow us to get the leadership. So its clearly a mistake.

Go watch the video. Bill Gates was NOT talking about the past like 5 years ago when Gates was CEO. This is about today! He was explicitly asked by Charlie Rose about Microsoft problems today, what is in the press, the five things Microsoft should change, etc. This is not ancient history of Windows Mobile. This is today, 2013. Bill Gates's reply is explicit and factually correct. Microsoft did not miss cellphones (ie smartphones) as Gates well knows, he led the jump into Windows Mobile more than a decade ago. The original vision at Microsoft and the strategy then - when Gates was in charge was fine. This question is about today, so what happened? Today 'the way we went about it didn't allow us to get the leadership' is not about then - when Gates was in charge and Windows kept growing and became the 2nd biggest OS and had 12% market share. It is about today, when Windows is in continuous free-fall and down to 2.5% (or 2.4%) market share and cannot get leadership, is not first, not second, not third, not fourth, nor even 5th biggest ecosystem in year 2012.

And Bill Gates answers with the explicit example of the cellphone strategy failing. Not that it failed in the past, that it is failing today. He did not say ''it was a mistake" he says clearly "it is a mistake" (emphasis mine) - talking about Microsoft today, under Ballmer's leadership today, in the context of Microsoft's problems as Rose's question posed, about today. (note that earlier in the interview Gates lists several areas where Microsoft is having success today). Don't try to paint this now as if Gates was talking about how in the past Microsoft's Windows smartphone strategy 'was a mistake' - he is clearly talking of today, and says it IS a mistake (and cannot ever win, as this strategy is unable to achieve leadership).

Bill Gates is a smart guy, he was earlier in the interview talking about measurement. When you measure your growth path that achieves 12% for a critical part of Microsoft's future, and then your successor abandons the strategy and starts feuds with everyone, and the market share plummets to 2.5% (or 2.4%) then it is very obvious, that the current "way we went about it" is flawed. Is a mistake. Is failing. And it "didn't allow us to get the leadership." This strategy is not only a mistake, it is untenable. It cannot win. It is fundamentally flawed. The Microsoft Windows Phone strategy is 'clearly a mistake' why? because it prevents Microsoft from being able to achieve leadership. It prevents Microsoft from achieving leadership. The current Microsoft cellphone strategy (ie Windows Phone) is - in Bill Gates's words - 'clearly a mistake'. Not possibly flawed or facing challenges or needing some readjustment. No. Simply put: clearly a mistake.

So we have the truth and we have the suddenly desperate Microsoft trolls, running around like headless chicken, trying to convince everyone, 'no he didn't say that'. Haha.. Well, at least I can sit here and say, with a broad smile today, I told you so. Bill Gates sees today in February 2013 that the Microsoft Windows Phone cellphone strategy is 'clearly a mistake' because it prevents Microsoft from the chance even of getting smartphone leadership. Yes. And who told you first? Who was literally the world's first to say, back then, that yes 'today the Microsoft strategy died', and even that the dream at Nokia was also dead? It was that silly little guy over at Communities Dominate, in June of 2011. I was first to call this strategy a dead duck. And I explained in deep detail what killed it. Now Bill Gates (independently and not acknowledging me) agrees with that assessment.

Yeah, I think I have provided a worthwhile service on this blog (for free, no ads, no registration, no spam..). And I think I knows this business they call mobile, haha...

February 18, 2013

Its time to update the biggest computer-maker listing. I really wish the big analyst houses would take over this chore, they report on the data separately already.. but yes, I was the first to start to count smartphones into the total computer shipment numbers and have reported that statistic now for many years already. If you want to see the chart for end of 2011, its here.. Time to do the 2012 number update:

So I have taken total computer shipments in units (mainframes, desktop PCs, laptop PCs, notebook and netbook PCs; plus tablet PCs like the iPad, Kindle and and Galaxy Tab; and smartphones - but not basic 'featurephones'). I used the best available data such as summaries by Gartner and IDC, plus individual company data for the non-smartphone computer data, and my own company analysis for the smartphone data for year 2012. Here is the Top 10 biggest computer makers chart, when all forms of personal computers are included:

Note the near perfect symmetry in the data for 2012. Tablet pcs sold almost half a million per day. Traditional PCs sold almost exactly twice that number, almost 1 million per day. And smartphones sold nearly twice as many as traditional PCs, and almost 2 million per day...

Looking at the Top 10 chart, Apple holds onto the top slot for the third year in a row but now starts to feel the heat of Samsung closing. Nokia tumbled from the past number 1 slot all the way down to 8th ranking and may tumble out of the list by the end of this year. Lenovo moved up fast powered by its smartphones and HP holds stubbornlhy onto the 4th ranking based only by its traditional PC sales (but there are rumors HP may come back to smartphones once again.) Chinese maker Huawei enters the chart powered only by its smartphone sales. Sony is moving up the chart as well from 10th to 7th while RIM is falling fast to 9th (was ranked 5th last time). HTC fell out of the Top 10. Then lets look at the operating system war

The overwhelming market dominance of Microsoft in the computer industry has now ended. Andoid (and Google) have become the biggest provider of computer operating systems, ending Microsoft's reign on top that lasted 30 years. 2012 was the first year when more computing devices running Android were sold, and now Apple's iOS ecosystem is chasing Windows and is likely to pass it in 2013. Obviously the powerhouse that was Symbian on pocketable devices has all but vanished.

All data here may be freely shared

NOTE: This table was updated to reflect Huawei official 2012 numbers and resulting changes to the bottom of the Top 10 chart. In an earlier edition of this chart, Huawei was ranked 5th based on its preliminary 2012 smartphone shipments widely reported.

For anyone who wants all the data on the mobile telecoms industry in one handy reference source, see the TomiAhonen Almanac 2013.

Its time to see the winners in our online/Twitter contest. 15 months ago I ran a Twittercontest among my followers. Nokia was just about to launch its first Lumia smartphones to run Windows Phone, but Microsoft's Windows Phone market share by the other handset makers then supporting Windows Phone, was down to 1.0%. There were some pundits promising that by 2012 Windows would have over 13% to 17% market share, one bizarre forecast promised 28% for Windows Phone in 2012. So I started a Twittercontest. Lets go one year into the future, after Nokia has sold Lumia for a year and some weeks, and how strong can Windows Phone be. We set the target timing to be Q4 of 2012, just over one year into the future.

Then I made an unfortunate limitation to the contest, I decided that only one entry per market share number is allowed, on a first-come, first-served basis. This seemed like a sensible idea to me at the time, but I didn't anticipate how big the contest would become, I should have just allowed multiple guesses of the same number, it would have been more indicative of what people really felt. Now obviously for those who entered the race late, they would find their preferred number likely was taken, and they would have to go far smaller, or far higher, in their number to find the first percentage that was not yet taken. I set the accuracy to one tenth of one percent. You can see all entries here Crowdsourcing a Forecast through Twitter for Windows Phone.

We had over 150 entries, most of them (even after no duplicates were allowed) settled between 6% and 14% market share for Windows Phone for Q4, 2012. That was very mightly optimistic there, the reality was far more harsh for the Microsoftians. We have all four analyst houses (Gartner, IDC, Strategy Analytics and Canalys) reporting their total market sizes and three of the four (Canalys, IDC, Gartner) reporting a Windows Phone sales number for Q4. The highest Windows Phone sales number by the three was by Gartner, at 6.2 Million Windows based smartphones sold in Q4. The lowest total market size of the big four was also by Gartner, at only 207.6 Million total smartphones sold globally in Q4 of 2012. So the very ''best case' statistic you can hope to find, says Windows scored 2.99% market share, under half of the lower end of the popular guesses in our contest.

But thats not how we calculated the winner. We took the total market size as the average of the four (Gartner 207.6 million, IDC 219.4 million, Canalys 216.5 million and Strategy Analytics 217.0 million) and their average therefore for Q4 was 215.1 million total smartphones sold. And then as I wrote my final Q4 and end-of-year 2012 smartphone results blog, I took the then-published market share numbers for Windows - by that time it was only 2 of the 4 analyst houses who had given us that number, Canalys said 5.1 million for Windows, and Gartner said 6.2 million. The average of those two is 5.65 million. That in turns is 2.63% of 215.1 million smartphones sold. We have a winning score. Whoever said 2.6% is the winner, and the two nearest to it one above and one below, are the runners-up.

As it happens, we have exactly 2.6 million as an entry, by @simplyanand (sorry for having your handle wrong originally and in the contest entry) - who, get this, actually predicted the score to two decimal points, saying it will be... 2.63% !!!! Wow. I'd like to borrow your crystal ball @simplyanand some day if I may haha.. That is perfection !! And Simplyanand will of course win the grand prize of three of my ebooks of his/her choice.

By this result the two finalists are Jonathan MacDonald @jmacdonald who picked the next number down, at 2.1%, and Eldar Murtazin @eldarmurtazin who picked the next number up, at 2.7%. They both one ebook each.

And I was just about ready to publish this blog, when I saw that IDC was releasing a revised number for their Q4 total market size, AND they were releaseing a number for Windows Phone. Hold the horses...

IDC revised upwards their total number for smartphones sold in Q4 from 219.4 million to 227.8 million. And they gave us a Windows Phone number as well, at 6.0 million. The math is now adjusted just slightly, so that Windows Phone market share now becomes .. 2.655% ie rounded off to 2.7%. By merely one half of one tenth, of one percent, Eldar Murtazin's 2.7% prediction turns out the most accurate and Simplyanand's forecast is off by a tiny fraction.

Of course I have to award Eldar with the win, he was most accurate, now that all houses were in. But IDC issued two numbers. By their first number, and by the time all four houses had reported in, the most accurate was Simplyanand, so I am going to make a jury's decision, to award two winners, both Simplyanand and Eldar Murtazin will be winners in this contest and win the grand prize of three ebooks of their choice from my ebooks. And then still Jonathan MacDonald is a runner-up, and I will also award Steve D ie @starlo777 a runner-up award for picking the next number above Eldar's at 2.9%. The runners-up will get to pick one of my ebooks of their choice.

So congratulations to all the winners. I will contact you all via Twitter and we'll process the ebooks to you. And we have a new Twittercontest running now, guess when Nokia CEO Stephen Elop will be fired or leaves office. The entries to that contest have already closed, but I will have more Twittercontests coming from time to time for my followers so you may want to follow me on Twitter, where I am @tomiahonen.

February 13, 2013

This is my annual statistical market review of the smartphone global contest. It also is the Q4 quarterly review. Welcome to a cavalcade of numbers and stats

We now have the final numbers reported by all four of the 'Big Four' handset analyst houses: IDC, Canalys, Strategy Analytics and Gartner. As always, I use the average of these four houses as the total market size. (Note, one day after I published the original version of this blog, IDC came with revised numbers including their split across operating systems, and because their total numbers for Q4 and full year 2012 wererevised upwards, I also have now updated my average numbers, up from the original 215.1 million to 217.2 million for Q4 and from 687 million to 697.7 million for the full year 2012. This blog now reflects the latest numbers, this only affects the market share percentages, some that have been reduced slightly due to the larger total market size number now used).

(NOTE: The numbers were revised & corrected after we learned official Huawei shipment numbers for 2012. Also the overall 2012 numbers for the industry changed slightly at a few of the big 4 analyst houses in their final count)

Taking that average number for the market size, I then force a 'best fit' analysis of all published actual sales numbers (such as for Apple) and/or strong consensus opinions (such as the case for Samsung), and add the missing pieces by what other data we may have regionally and on end-user surveys, usage data etc. And I publish the most complete and thorough market share analysis of the smartphone market every quarter, including the full year numbers annually (as today). I also offer my analysis of each brand and how they've done in the just-ended period. This long-running series of blogs is what I call my 'Bloodbath' series as we are in Bloodbath Year 3: Digital Jamboree. If you need the numbers for year 2011, they are here: Full year statistics for 2011 Smartphone Bloodbath Year 2: Electric Boogaloo. with no further ado, lets get to the numbers. I will start wtih the full-year numbers, as over time, this is probably what most will want to find (The Q4 data will be further down in the blog article):

The smartphone global market grew 44% from 2011 to 2012 and for the full year, smartphones accounted for 39% of all mobile handsets sold in the year, globally. Among the major manufactuers, Samsung topples Apple at the top, becoming for the first time the biggest smartphone maker of the world, a position Nokia held for the first dozen years of the industry and Apple took over briefly for the year 2011.

Motorola drops out of the Top 10 for the first time in smartphone industry history, and Lenovo which two years ago didn't make any smartphones climbs into the Top 10 powered by the LePhone which was only sold in China as late as the summer of 2012. Thats the power of China now being the biggest smartphone market where four out of every ten smartphones are sold.

The race from 3rd ranking (Nokia) to 8th (ZTE) is very tight, separated by only 3.5 million units on an annual basis between the 4th and 8th position. Expect this part of the market to see a lot of competitive pressure in 2013 as Sony has said it wants to be a top 3 maker, Blackberry is hot off the gate in Q1 with the new BB10 operating system, ZTE experimenting with the Firefox OS, and Nokia continuing to struggle with the undesirable Windows Phone OS that faces problems after problems.

Android powered almost two out of every three smartphones sold in 2012, and Apple's iOS was in one out of five. Former giant Nokia's Symbian tumbles from third to fourth, and Blackberry recaptures 3rd ranking. Samsung's bada continues to outsell Windows Phone, where the so-called 'third ecosystem' finishes year 2012 in solid sixth place, twice as bad as promised. There were some very amusing forecasts about how 'well' Windows Phone would sell smarpthones for the year 2012, forecasts made in 2011. I'll return to analyze those forecasts in an upcoming blog (spoiler alert: I was once again the most accurate forecaster of the handset industry) So next, lets look at the installed base of smarpthone platforms globally:

INSTALLED BASE OF SMARTPHONES BY OPERATING SYSTEM AS OF DECEMBER 31, 2012

Android has now passed the half-point where more than half of all smartphones in use worldwide are running Android. Apple is on the brink of reaching one in five smartphones in our pockets in the installed base. Nokia's Symbian keeps falling as the older Symbian phones are traded in. iPhones, Symbian and Blackberry based smartphones have a long afterlife in the second hand market and as hand-me-downs (which are included in these numbers of course, as I measure the full installed base).

The installed base of smartphones is now 1.32 Billion smartphones, almost as many as total installed base of all types of personal computers in use (desktops, laptops, netbooks and tablet PCs, all added together). We'll pass that level now this Spring of 2013. Now lets do the quarterly results:

QUARTERLY SALES

Now lets turn to the more intense and volatile quarterly battle in the Bloodbath Year Three: Digital Jamboree. If you need Q3 numbers, they are here. And now, the final quarter of year 2012, here are the final Q4 results:

The total smartphone quarterly sales passed the 200 million units per quarter level for the first time ever - it was just 21 months ago, in Q1 of 2011, that the industry passed the 100 million sales per quarter level. The smartphone market grew 27% into the Christmas sales quarter from Q3, and on full year growth, the smartphone market grew 40% from Q4 of 2011. As we are just on the brink of the number, I am no longer certain we will pass the 1 Billion smartphone sales level annually for this new year 2013, we might end this year selling something like 975 million smartphones, but if we miss the 1 Billion level this year, it will only be by a hair. As to mobile phone handset migration from dumbphones to smartphones globally, we are now at the point in Q4, 2012, where 47% of all phones sold worldwide are smartphones.

Then to the chart action. The big mover is Lenovo, jumping up from 9th ranking where they appeared last Quarter as they joined the Top 10 and pushed Motorola out of the Top 10 for the first time ever. While Lenovo is only ramping up sales outside of China (having entered India, Russia, Indonesia etc) their total sales bring Lenovo already into the Top 5 (dropping Sony out of the Top 5 where it was briefly last Quarter, ranked 4th).The rest of the chart is minor jockeying. The Top 3 are settled into Samsung, Apple and Huawei. ZTE and LG saw a change of one ranking, RIM and HTC moved two rankings.

Nokia barely held onto its last place finish in the Top 10, as the 10th ranking. Nokia is being chased by Chinese Yulong/Coolpad, who may well have passed Nokia in unit sales now in Q1 of 2013 as the Chinese celebrate New Year gift-giving, especially as Nokia is having trouble delivering new Windows Phone 8 based updated Lumia smartphones in volume and mostly missed the Chinese New Year sales period. Yulong is ranked one of the bestselling Chinese smartphone brands domestically but I estimated their global sales at 6.1 million for Q4. Since nobody suggests Yulong/Coolpad to have sold more than 6.6 million in the Q4 quarter of 2012, its still pretty safe to say Nokia was bigger that time. Now lets look at the smartphone operating systems:

The ecosystem battle is settled now, Android rules the new computing world selling on more than two out of every three smartphones sold. Apple is the clear number 2. These two have now taken 90% of the total smartphone market. The race among the others is truly for the scraps, with Blackberry now in the driver's seat having finally launched the BB10 OS platform and finding renewed market attraction in Q1. Microsoft's Windows Phone 8 is just about as big a flop as Windows Phone 7 was, over Windows Phone 6, over Windows Mobile... The Microsoft OS has fluctuated in the near-irrelevant scale where most other OS platforms go to die, from a low of 1.0% to a peak of 3.0% and currently holds 2.7%.

Year 2013 brings new vigor to the bottom end of this battle. Samsung is replacing bada with Tizen. With many other handset makers committed to Tizen including Huawei the third biggest smartphone maker, Tizen is the strongest of the newcomers. Ubuntu, Firefox and MeeGo-update Sailfish are all coming too this year to a pocket near you. If you want to read my preview of their chances, its here: 4 new operating systems for 2013. We'll monitor those as we move from Bloodbath Year Three, Digital Jamboree to start Bloodbath Year Four, Smartphones Galore.

SMARTPHONE MANUFACTURERS IN 2012

So next lets do the smartphone manufacturers by brand, in order of their sizes. So first up, its Sammy...

Samsung follows up a banner year 2011 with a blow-out year 2012, doing everything perfectly. Wherever Nokia dropped some candy, Samsung was there to snatch it up. Where rivals missed opportunities, Sammy pounced. Where Apple left openings, you found Galaxies. Galaxy Note, Galaxy Beam, Galaxy Camera, Samsung was the poster child for glamor and cool in mobile, yet managed to serve smartphones to the very low end of the price pyramid with its proprietary entry-level bada OS (the most successful smartphone OS launch in the history of this industry, yes selling more in its first two years than Apple's iPhone). As to how does Samsung currently split its smartphones across its three main OS platforms in Q4, its like this

Samsung was the fifth biggest smartphone maker two years ago. It fought its way to second biggest last year - doing this profitably, and now jumps ahead of Apple, growing from year 2011 by 221% and finishing with smartphone sales of 215 million, and 58% bigger than number 2, Apple in smartphones. And Samsung did this all profitably, while preparing to launch its new OS, Tizen for 2013. What Samsung did in smartphones in the past two years, is similar to what Nokia did to Motorola in digital phones 15 years ago, or what Apple did to Sony in portable music players a decade ago. Ironically, Samsung was able to spank both of these competitive masters, Nokia and Apple, in the process. Behold the new home electronics master, if Samsung continues at this rate, it will be more than twice as big as its nearest rivals in the smartphone business by year-end. This is perfection in the execution of a smartphone strategy, not one tiniest stumble in the whole year. Samsung earns an A+

Apple seems to have peaked a year ago, when it was hitting 24% market shares quarterly. Now it only manages to get to 22% level. This is still very powerful sales and market share performance, Apple is a clear number 2 in the smartphone races, and ludicrously profitable doing so - but its market gobbling growth path has stalled. Now Apple is in anemic growth stage, as it tries to find ever more elusive markets for its high-priced iPhone models. Its about time to release lower-cost iPhones to address the mass markets in the Emerging World where most smarpthone business will be made.

The latest iPhone model, the iPhone 5 was received with far less excitement and amazement as previous major releases, and the iPhone screen size and camera etc are falling behind the leaders to an alarming degree. Apple still has the highest loyalty in the industry but the gap to the competition is shrinking and Apple's unique sales points are losing some of their luster. Blackberry finally has its iPhone-clone built on its new BB10 OS, the Windows Phone OS under WP8 is 'competitive' or so claim Microsoft and Nokia; totally new and better OS platforms are launching in 2013 like Tizen and Sailfish (both evolutions of Nokia's abandoned MeeGo, the first OS that was rated better than Apple's iOS). Apple is squeezed now from all sides, with massive screen sizes like Huawei's 6 inch screens, and enormous cameras like Nokia's 41 megapixel Pureview (rumored to come to Lumia) etc. But Apple has the chance now to split its product range, offer a lower-cost 'Nano' iPhone and introduce a bigger screen monster iPhone in the $1,000 price stratosphere to own once again the top of the price pyramid (before Samsung does that too).

Apple had a very profitable year, it became the most valuable company on the planet etc. That is irrelevant to THIS contest. That is a battle for 2012. This is the race for the decade. He who owns the smartphone space in 2020, owns every consumer's identity, wallet, behavior, and value. Apple is fighting to win the wrong war right now (vs Samsung and Google who have their eyes on the big prize). So what matters in the Smartphone Bloodbath - is to have market share and doing it profitably. Apple is satisfying short-term profit greed at the cost of long-term market share gains. Wrong move. I grade Apple's monsterously profitable, but anemic market share growth year only as a B.

Nokia is a total wreck. Nokia towered over its rivals only 24 months ago, twice as big as its nearest rivals (this is a bigger dominance of an industry than Toyota or GM or Volkswagen have ever had in cars, bigger than HP or Dell or IBM or Apple have ever had in personal computers). Nokia grew more in year 2010 than its rivals like Apple, RIM and Samsung, meaning Nokia was pulling away from the competition, the gap to the rivals was growing, not shrinking. Nokia sold 100 million smartphones in 2010 and did this with increasing profits and increasing profitability. This was done using the old Symbian OS which Nokia was about to replace with the highly admired and desired MeeGo OS. That all, new CEO Stephen Elop observed, and decided that when you are twice as big as your nearest rivals, highly profitable and growing faster than your rivals - that is a catastrophy so bad, you stand on a 'burning platform' and Nokia had to abandon this degree of 'failure' and instead select the least successful, most undersirable, bug-filled and risky platform, Windows for its smartphones - a move that had destroyed every other company that ever tried this moronic move in mobile.

Immediately after announcing this mad Microsoftian misadventure, Nokia was plunged into disasterous sales collapse globally. Nokia's massive market share of 29% in Q4 of 2010 fell to 12% in Q4 of 2011 - literally a world record collapse of a global market leader. Not only was this worse than any other handset industry failure like Palm, Motorola, Siemens and Blackberry, this is literally the worst collapse of a market leader of any industry, ever. Worse than Coca Cola disaster with New Coke. Worse than the brakes recalls with Toyota. Worse damage to the market share and revenues and profits of the company than even the oil spill by BP with Deepwater Horizon or the earlier oil tanker disaster around Exxon Valdez. This is the world's worst failure by corporate management of any Fortune 500 sized company that was a leader of its industry. Yes, Nokia's CEO established a world record in failure with his idiotic strategy. Then, not content to hold the world record for management failure, Elop decided to make matters worse, and mismanaged Nokia so badly in 2012, that he set a new record in failure for 2012! He plunged Nokia's mid-tier 12% market share in Q4 of 2012 down to what it is now as 3% for Q4 of 2012. He took a world record in failure, and decided it was not enough, he broke his own world record for failure. Stephen Elop will go down as the name of the most self-destructive CEO in the economic history of corporate governance.

Do I need to say more? Nokia made huge profits with smarpthones before this strategy. Now at one point in the year, Q3 of 2012, Nokia produced a 49% loss per smartphone sold. The transition from Symbian to Windows was promised by Elop in his February 11, 2011 strategy to be a 1-to-1 transition. Instead he has scared away 17 out of every 20 customers he tried to migrate to Windows. Of the remaining 3 who were duped into taking a Lumia branded Windows Phone smartphone, two out of three hate their phones so much, they will never take another Windows Phone again (says the latest Bernstein survey of consumer satisfaction). This mirrors earlier Yankee Group survey that among Lumia buyers, four out of ten rate the phone the worst they've ever seen. The Lumia series has seen the world's most expensive marketing push by Nokia (more than twice as much marketing dollars than the previous record) added to by the biggest marketing pushes by carriers like the biggest ever launch budget by AT&T. Microsoft threw literally billions more into the pot, including handing out free Xbox 360 videogaming consoles to some buyers of flagship Lumia products. Nokia gave out tens of thousands of free handsets to 'thought leaders' and then engaged with a dirty tricks squad together with Microsoft to go astroturf blogs and intimidate anyone who tried to write anything critical of the Lumia series. Nokia and Microsoft were caught paying volunteers to go write glowing review of Lumias etc.

All this was for nothing. The Lumia series has the lowest satisfaction of any Nokia smartphones ever (compared to MeeGo based N9 and N950 which launced at the same time, and have the highest ever). The Lumia series prices collapse within weeks of new models being launched, often sold in bargain-bins. The Lumia series is the first-ever Nokia smarpthone series whose resale value is essentially zero. So 17 out of 20 loyal Nokia customers has already been scared away, and of the remaining 3, two are eager to run away at the first chance they get. That means only 1 out of 20, yes 5% of Nokia's remaining customer base is loyal enough to buy another Nokia smartphone at some point in the future.

No wonder Elop is so much in panic, he is now trying to convince analysts that his featurephones running S40 basic phone OS, are somehow 'smartphones' simply because Elop says so. No, Stephen Elop, you do not get to change the rules of the game when you are losing. For those who are interested, I am running a multi-part analysis of the collapse of the Nokia smartphone juggernaut. I am analyzing the world record market collapse, one issue at a time, with one picture at a time. You may enjoy it. Here is the latest installment (with links to the rest of the series). Ok, enough with my daily Nokiarant, you wanted the split of Windows to Symbian, its pretty easy this past quarter, two thirds one, one third the other. For Q4:

So what can we say about Nokia? When you go from selling 104 million smartphones profitably to selling 35 millon at massive losses, in only 2 years, the question is not, was this a disasterous performance, the question becomes, why is the CEO still in charge? Is the Board of Nokia in collusion? The Board of Nokia should also be investigated for breaches to its fiduciary duty. And yes, in the past year, Nokia fell from selling 77 million smartphones to 35 million now, literally collapsing sales by falling to less than half in just one year - a year when the industry grew by 41%. And Nokia's losses? During 2012 the losses in the smartphone unit only increased. I wish I could give Nokia a grade worse but all I can do is give them an F- for failing.

So the company formerly known as RIM or Research In Motion, which recently renamed itself Blackberry, out of Canada, just after everyone thought it can't get worse than the company did in 2011, has seen its Annus Horribilis in 2012. What partly shaded RIM's disaster, was the train-wreck over in Finland that was Nokia at the same time. Blackberry's collapse in smartphones ranks only as the 6th worst crash in the history of mobile phone handsets. And while the fall did push RIM/Blackberry into loss-making, that is now over, the company is back to generating profits. Its peak market share of 22% is now down to 3%, but finally, after a long wait and delays to the launch, the new OS, BB10 is finally released with the first two smartphone models launched, to very warm reception and high demand. Blackberry's worst days are past. Can the Canadian smartphone maker now turn this around and find growth once again to the iconic smartphone pioneer, that remains to be seen in 2013. But at least the deep fall period is over. I grade RIM's year 2012 as a D, barely passing grade, due to the strong finish and return to profitability.

Get familiar with this name, the growth trajectory is very strong, as is their market grabbing strategy. Chinese Huawei is now a top 3 telecoms infrastructure vendor (competing with Ericsson and NokiaSiemens Networks) and a top 3 smartphone maker. They have been very successful in using synergies between the two divisions to help sell more smartphones, bundling some with their network deals, especially in emerging world markets. Huawei often also has its phones sold under carrier/operator brands, so the big analyst houses often undercount the total sales of handsets by Huawei. Yet all the major analyst houses agree that by Q4 Huawei had indeed become the third biggest smartphone maker (as I reported on this blog already early last year).

Essentially all of Huawei's smarpthone sales are currently on Android. They have been a Windows Phone partner but a very reluctant one, so that at times Microsoft has seemed unwilling to even acknowledge them. However Huawei is now releasing the cheapest Windows Phone smarpthones by any manufacturer, to launch into the Africa market. They may start to pose a real rival to Nokia within the miniscule Windows ecosystem in smartphones. The more interesting play is Tizen, Huawei is committed to launching its first Tizen smartphones this year 2013 and that platform is a real contender for 'third ecosystem' as it has major carrieres supporting it from NTT DoCoMo to Orange to Vodafone to Sprint to SK Telecom as well as many major handset manufacturers in the alliance led by Samsung and Intel. Tizen has the real potential to grow to become the major alternative to Google's Android, and if so, Huawei is particularly well poised to capitalize on that opportunity.

Of its 2012 business, Huawei has been squeezing ultra-slim profits out of its business, preferring market share gains to profits. Its handset unit is barely profitable, but being so, this is viable business and Huawei has shown very strong growth, jumping from 8th place in 2011 to 3rd place now. I grade Huawei as a B

The smartphone maker formerly known as SonyEricsson, and a perennial loss-maker, was bought out by Sony and now has returned to healthy profits once again. The CEO says the company's future is in mobile and the company has set as a target to become a Top 3 smartphone maker. Foir a while in 2012, there was also a sales trajectory suggesting Sony might achieve that, but then the big Chinese makers zoomed past Sony and suddenly the Japanese electronics giant is facing whiplash wondering what happened. The market is rushing to low-end smarpthones and if Sony is serious about a Top 3 bid, it better learn soon from Samsung and Huawei, and rush a low-end Sony smarpthone series, not just the top-end Xperia models to compete with the iPhones. Sony does hold many strong assets it may be bringing to bear, starting with the Playstation brand that could sit very well with a highly desirable youth smartphone.

For its 2012 performance, as Sony grew, but only at the pace of the industry, its ok performance, not excellence. As Sony pulled out of loss-making and is once again profitable in smartphones, I grade Sony's year 2012 as a B-.

Taiwanese smartphone maker HTC was the fourth biggest smartphone manufacturer only two years ago, but it seemed to lose the plot. HTC was the biggest Android smarpthone maker (and the biggest Window Mobile smartphone maker) but soon upstarts on Android like Samsung and Huawei shot past HTC while the Windows Phone nightmare drained efforts on that dead platform. HTC was often featured with promising cutting edge technology like the 16mp camera and high speed '4G' technology, yet its user experience was regularly poor and loyalty very bad. Hence HTC's growth stalled and its market share started to dip heading into 2012. In the past year HTC unit sales fell by 30%. The company is still profitable but it seems every news item about HTC consists of warnings of ever shrinking profits. As the company is still viable (ie profitable) I can't grade it below a C, but because of the severe collapse of its market share, I give it the worst C I can, ie a C-Minus, so HTC earns C-

China's ZTE is trying to keep up with its cross-town rival Huawei and other hungry younger Chinese smartphone makers, especially Lenovo and Yulong/Coolpad. It failed to meet its sales targets for 2012 and found the smartphone wars costly pushing the handset unit into loss-making. ZTE is still a Top 10 sized smartphone maker, and missed passing Nokia for the full year 2012 sales by a hair (in the latest Quarterly data, ZTE is far ahead of Nokia already so for year 2013 it won't be even close). ZTE is now testing a new OS platform Firefox for 2013 and is hoping to recapture the profitable sales pattern it had before. Because they grew but went from profits to loss-making, I rate ZTE now a C for 2012.

South Korean LG was deeply in the red in its smartphone misery once it too the perilous Windows detour, but recovered and now safely on Android, is on the mend. LG grew smartphone sales in 2012, but at a slower rate than the industry, only 18% for the year. LG is a contender in the mid-pack of the Top 10 and where others like Nokia, RIM and HTC are stumbling, with LG now solidly on Android and profitable growth, 2013 could be the year of strong resurgence. But its 2012 performance is ony passing grade. I give LG a C+

Welcome to the big leagues Lenovo. The company that bought IBM's PC business and then looked at the iPhone, and decided to offer the Chinese market the LePhone, is now aiming for the world. They left Chinese domestic shores only in Q3 and now are selling in a handful of major markets - like Russia, India, Indonesia - and still in Q4, more than 90% of their total smartphone sales were inside China. But this is a hungry large tech company eager to take its place. Expect Lenovo to keep growing in 2013. We haven't seen any major stumbles by this brand so for its early going, its all good. I grade Lenovo's year 2012 as an A

MOTOROLA - crashes out of Top 10

Just a few words about MotoMoto... We kind of expected this, Google cannot afford to try to make Motorola competitive in the Android space, for fear of pissing off the other Android partners, many of which have ongoing alternative OS plans (HTC, Samsung, ZTE on Windows, Samsung also on bada) or who are planning new OS adventures (Samsung and Huawei on Tizen, ZTE on Firefox). So Google is cutting the staff at its Motorola unit, turning it ever more into a niche maker of specialist high-end 'reference' handsets and trying to reassure its Android partners that Motorola isn't - and won't become - a real threat to them. By letting Moto fall out of the Top 10, Google goes a long way on that mission. I still do expect Google to sell off the Moto handset unit at some point, to rid itself of this thorn.

There are obviously tons of third-tier makers from the hot bubbling just under the Top 10, like Yulong/Coolpad of China. There are regional players from India, Russia, Brazil etc (in Brazil there is a smartphone maker who owns the local rights to the name of iPhone, but they run Android, so if you ever wanted a genuine iPhone that uses Android, go get yours from Brazil..). Many newcomers are still rushing into the smartphones space, I monitor that as it evolves here on this blog from time to time. Probably the most eagerly awaited newcomer phone this year will be Jolla the ex-Nokia N9/MeeGo/Maemo team that might well produce the most award-winning new smartphone of the year for 2013, if the N9 and MeeGo in 2011 was any guide. The new evolution of MeeGo via Jolla is called Sailfish and the little Finnish start-up has already scored their first carrier deal (DNA of Finland) and even have a handset manufacturing partner joining the Sailfish ecosystem. Good luck to Jolla in 2013.

We also have several in this group who have been making noises in the past year that they want to 'come back' or grow into the top 10, like former Top 10 makers such as Sharp, Panasonic and Fujitsu of Japan - all wanting to do this via Android obviously. And other local specialists like South Korean Pantech, the third biggest handset maker of South Korea behind Samsung and LG. Even Motorola's 'other' unit, that was not sold to Google, Motorola Solutions, is returning to handsets releasing a very robust enterprise-oriented handset called the AME, running Android of course. So we might get some severe confusion in the market this year with two separate Motorola companies selling Android smartphones haha, a bit like early in Formula 1 last year we had two rival racing companies called Lotus. Ok, enough with the delays, lets move onto the ecosystem war of the century, update for year 2012. How is the war of the smartphone operating systems then, in 2012?

SMARTPHONE OS ANALYSIS 2012

The year 2012 made it very clear we are currently seeing a duopoly, Android and iOS, with the others truly fighting for the scraps. By Q4, Android and iPhone held over 90% of total global smartphone sales. The current crop is not up to putting up a fight, Blackberry lost its chances when it was unable to capitalize on its sudden consumer appeal three-four years ago in various Emerging World countries. Windows, well, Windows lost it gosh, years and years ago. Symbian didn't lose it, Symbian was killed by a corporate assassin called Elop, it was doing just fine in most of the world and would have fit Nokia's portfolio very well at the low end today, where Windows Phone cannot provide handsets (Symbian was selling sub-100 Euro handsets back in 2010, the cheapest Lumia, the 620, costs more than 200 Euros in unsubsidised form. The majority of the global smartphone market this year will be low-cost smartphones). bada was a kind of experiment and prep work by Samsung to set up Tizen coming out this year, so its understandable Samsung stopped pushing bada last year. And MeeGo was sunk by Nokia's mad-as-a-hatter CEO.

But we do have new OS platforms coming this year, Tizen, Firefox, Sailfish and Ubuntu, as well as the BB10 total redesign of Blackberry's OS. The race may still resume in attempting to find the 'third ecosystem' - just don't be deluded into thinking that might be Windows Phone haha, the biggest failure of Microsoft's launches, this side of the Kin youth phones... So lets do the smartphone OS platforms and their analysis, again by order of size, starting with the Big G of mobile.

Android is now the bestselling computer software OS across all computing platforms, outselling total Windows on all PCs, tablets and smartphones by already 50%. Its now only a matter of time when Android becomes the world's most used computing platform also by installed base. Quite an amazing accomplishment by an internet search company that was a latercomer to the search game, and still a decade ago wasn't even sure how to make money on the internet haha.. I already wrote my analysis in December about what this means to Google, Android, smartphones, the IT industry and the tech industry overall, that Google and Android have won the battle of the century. So what of the split? Here is how the handset manufacturers supporting Android are split by Android market share during Q4:

So yeah, the Android camp is strongly ruled by Samsung and former giant HTC is nearly vanishing in this space. Huawei has taken second place (and imagine what happens if both of these shirft their allegiances strongly to Tizen in 2013-2014). But back to the performance review. Android powered two out of every 3 smartphones sold in 2012. Whereas the industry grew 41% from 2012, Android grew 217%. Android is more than 3 times bigger than its nearest rival (Apple's iOS) by new sales for the year 2012. You can't really do better than that. This is a solid A performance.

First, don't pay any attention to the quarterly fluctuations of the iPhone sales pattern, you'll just go mad. Its meaningless, pay only attention to the annual sales pattern. Apple's iPhone always sees a huge spike when the new model is released, so compared to the other rivals in smarpthones, Apple's quarterly jitteriness is not a problem, its part of their DNA. But on the annual level, Apple sales were essentially flat, they kept up with the Joneses only, the industry grew 41%, Apple grew 46%, they picked up 1 point of market share for the year. Thats not impressive. As for the OS wars the profitability is not a factor, even that cannot help mitigate the iOS grade here, I have to give Apple only a grade of C+. You are gradually losing the game, my friends... You better shape up soon!

Blackberry fell off the cliff but by some miracle, didn't die. The worst of the fall seems to be over, they still lost a lot of sales in 2012 but the early news is that the BB10 OS is hot and sales are up (we have to see to believe, but early signs are good). When you lose a third of your actual sales in one year, its truly bad, and here in the OS wars, even profitability is no savior. I rate BB as D.

Nokia's Symbian did not die a natural death. It was assassinated by its CEO. The crash was caused by the Elop Effect and once the CEO badmouths your product (repeating the Ratner Effect) and simultaneously makes your current products obsolete without offering anything to replace the sales (Osborne Effect) the resulting Elop Effect was inevitable. Yet that does not excuse it, the collapse of Symbian is obviously a world record, going from 29% to 1% in 24 months and Nokia's CFO, Timo Ihamuotila, has already said in January 2012, that Q4 was the last meaningful level of sales for Symbian, when they only sold 2.2 million smartphones. This is the last quarter of Nokia's Symbian being measurable in the smartphone races. For the full year, due to still the early 2012 sales, they finished in fourth place (ironically, ahead of Windows Phone) but there is no denying it, Symbian is kaput. I grade the dead OS with an F.

Samsung's little bada project was a stealth success. They achieved the best-ever launch of a new smartphone OS, selling more even than the iPhone in the first 24 months, until the ramp-down started to prepare Samsung for Tizen. bada is now in maintenance mode and the peak performance is past. Still for the year, bada managed to outsell its far more visible and hugely marketed contemporary rival, Windows Phone by 200,000 units, 16.2M to 16.0M (and had Ballmer not idiotically announced that there will be no migration path from Windows Phone 7.5 to Windows Phone 8, which crashed Nokia Lumia sales in Q3, Windows would have eked ahead of bada this year, but that was not to be). For the little engine that could, for the brief time you were with us, I grade bada a solid B.

The world's second-bestselling smartphone OS only five years ago, which at its peak had over 20% global market share, Windows is the poster child for utterly ruining your brand in mobile. Microsoft bankrupted its launch partner Sendo, then screwed Motorola and LG and Nortel and HTC along the way from one Windows fiasco on smartphones to another. The Windows Mobile 'ecosystem' had an 8% market share four years ago at this time. By the time that was ruined, and no migration path to Windows Phone was promised, the Windows smarpthone share had plunged to 3% (both platforms combined) by the time Microsoft was bribing Nokia to join its so-called 'third ecosystem' (when Windows Phone was actually the 7th of 7).

That 3% was added to then Nokia's massive 34% annual market share in smartphones - so this new partnership was commanding 37% of global smartphone sales - of which even the most optimistic analysts were so dubious, they felt Nokia and Microsoft would land with something like 25% two years later (if all went well). Nobody in their right minds thought this partnership could deliver anywhere near its promise. And it didn't. Look at the trend line - Microsoft was literally a dead-man-walking in 2011 before Nokia joined, its partners fled this poisonous 'ecosystem' in droves: SonyEricsson, Motorola, Dell, LG all went never to come back. Samsung and HTC both cut their involvement in Windows and the 'new partners' ZTE and Huawei both delayed their phones as they saw no traction in this 'ecosystem' Meanwhile Windows market share fell to 1% through most of 2011... From 21% to 1% in five years.. Nobody wants the Windows system on their phones, not consumers, and definitely not carriers/operators.

Now we have seen Nokia CEO Stephen Elop massacre the Nokia Symbian smartphone loyal customer base business, converting 104 million annual sales in Symbian to a crummy 13 million Windows sales. Nokia sacrified 33% market share to give Microsoft today a full year market share now of .. 2%. This is EXACTLY what Microsoft had for Windows Phone before Nokia joined this 'partnership' After billions spent in promoting the highly undesirable Lumia line, Microsoft has achieved nothing, zero, zip, nada, rien, ingenting, niente. I wrote my analysis of who won and who lost the battle of the century (how Google won and how Microsoft lost the biggest tech battle of our lifetimes). And for those who refuse to face reality, I spelled out in deep detail why we are now past the point, that Windows cannot recover, it will never become the third ecosystem, no matter how much money Ballmer throws at this dog. Ok, enough with the rant. What is the split you ask? Here is how that goes, its all Nokia as we can imagine:

The only reason Windows exists now in the smartphone 'wars' is because Ballmer is willing to throw good money after bad. We've seen this movie before, it will not last long. Windows Phone will be gone the way of the Kin and the Zune. There is zero traction to this dead platform and only Nokia is even willing to do any of the heavy lifting to pretend there is sales - and that well is now nearly dry. When Nokia started on this journey to pump up Windows, Nokia had the sales of 29 million new smartphones per quarter. That is now down to 6.6 million per quarter. There is no more blood to be squeezed out of this company. So Windows? Failed utterly. I grade them an F.

So thats the end of the most competitive global market ever, that of smartphones, where more global Fortune 500 sized rivals compete against each other worldwide than in any other industry ever before, cars, banks, airlines, computers, home electronics, petroleum etc. The smartphone Bloodbath was in its Year Three, Digital Jamboree and the carnage just continues and ever more rivals are rushing in, even as some major brands pull out finding this race too rough (in 2012 we lost Dell and HP among global giants in smartphones, but HP now is hinting it might return). So we proceed to Smartphone Bloodbath Year Four Smartphones Galore. More analysis and numbers when Q1 data is in, and if we have interesting news to report along the way, I'll be posting my updates as well on this blog. If you want to stay current on this stuff, you may want to follow me on Twitter, I am of course @tomiahonen. And we'll next do the winners in the Guess Windows Phone market share in Q4, our Twittercontest from 2011.

PS - Allow me one plug - for those who need more info and statistics about the handset industry, the regional splits, the price pyramid, the features of the installed base, the market shares by continent, etc, please see the TomiAhonen Phone Book 2012, an ebook formated so you can have the 100 charts and tables all in your pocket, installed onto your smartphone, or read on your Kindle or tablet PC and always available. At only 9.99 Euros, the 170 page statistical volume is the best value in handset market information you can find. See TomiAhonen Phone Book 2012 for more.

As to this blog, we'll now look at the strategy that Nokia CEO Stephen Elop introduced on 11 February, 2011. He showed this picture at all strategy sessions two years ago.

So this was how his new Microsoft partnership, and the migration to Windows Phone was supposed to happen, according to his new strategy, over the next two years. This picture is in revenues, Windows Phone was supposed to achieve better than 1-to-1 revenue migration from Symbian sales levels, and even take a small part of Nokia's basic featurephone sales revenues. The total revenues of Nokia handset unit were supposed to remain flat during this transition period.

LETS ADD CONTEXT

The part Elop conveniently omitted from that picture, was that Nokia showed strong growth in both its smartphone business, and its featurephones business, during 2010, and that revenue growth was accelerating towards the end of the year, as the world was emerging from the global economic crisis, and as Elop took over. This should be the picture, to show the context:

So to start with, Elop abruptly interrupted Nokia's strong revenue growth in both the smartphone unit and the featurephones unit - this while the global handset industry was growing revenues very strongly (has doubled in the two years since this was announced). But yes, we can see the three legs here. Since we know when Lumia series was launched (Q4 of 2011) and as we've heard Nokia CFO Timo Ihamuotila tell us that Q4 of 2012 was the last quarter of meaninful Symbian sales, we have the actual time scale for the strategy clearly defined. The new Strategy was announced February 11, 2011, when Q4 of 2010 was the last reported quarter (Nokia reported the numbers only three weeks earlier); and the transition will have ended by the end of Q1 of 2013, so the two year transition period as promised by Elop in February, will have been achieved. That sounds good. Lets now look at what he delivered in that time.

SYMBIAN DISASTER

So we have three legs in the strategy. Nokia's world-leading sales of Symbian based smartphones - which outsold nearest rivals at the time - Nokia smartphones outsold Apple's iPhone by 2 to 1, and Samsung's smarphtones by 4 to 1 - and Nokia grew more in 2010 than either rival so the gap between these was not closing, actually Nokia was pulling away from its strongest rivals. Nokia's dominance of the smartphone market was bigger than what Toyota or GM has ever had in cars. Ever! Nokia's dominance in smartphones was bigger than what HP or Dell (or Apple) has ever had in computers. Ever! Yes, what Elop inherited in 2010 when he took over as Nokia CEO was a massively overpowering global juggernaut in smartphones. And yes, look at that picture - the revenues generated by Nokia's smartphone unit in 2010 did grow - strongly. And Elop's strategy would cut the growth, and hold smartphone sales revenues flat for 2 years, and generate about 150 million more sales out of Symbian as he would transition to Windows Phone. So what happened to the 'cash cow' of Nokia, the highly profitable smartphone business based on Symbian smartphones, the bestselling smartphones of China, India, all of Africa, all of Latin America, etc. This is what happened to the first leg of Elop's strategy:

Ouch! That is massive failure. That is a disaster! Yes, the Nokia Symbian sales did not sustain healthy sales for three more quarters before the new Lumia sales could emerge, but rather, collapsed immediately (due to the 'Elop Effect' in particular the Osborne Effect part of the Elop Effect but also the Ratner Effect associated with the Elop Effect). So lets redraw the strategy picture, showing now the reality and the loss that Elop's management of his promised strategy, did in fact destroy half of Nokia's promised Symbian sales. This is reality vs promise in the first leg, the Symbian leg, of the promised new Elop strategy for Nokia:

So yes, the yellow/blue vertical lines show the area that was destroyed by Elop with his Elop Effect, the annuncement of this strategy before he had Windows phones to sell (ie 'Osborne Effect') and that he bad-mouthed his own products as uncompetitive (the Burning Platforms Memo ie the 'Ratner Effect').

Gosh-darn-it !! How big is that damage? Yes, very good question. We can now measure it. Since this diagram offered by Elop himself was in revenues, we can now calculate the loss of this part 1 of the Strategy failure, the Symbian part. It was.. (you better sit down) .. 11.9 Billion Euros (16.0B US Dollars). Ouch with a big Oh.. Why is this clown allowed to remain as CEO if he is this incompetent? But at least we have his saving strategy, part 2 of this plan, the Windows Phone sales, which will recover from the loss in Symbian sales. So lets adjust his strategy picture (first picture) to this loss and see how the Windows Phone part will save Nokia's position. This is what the revised picture looks like, after the self-induced damage to Symbian, by Elop. Now his strategy looks like this:

So, luckily Elop promised us that his Symbian losses will be compensated by more than 1-to-1 with Windows Phone smartphone revenues. So yes, it started to seem that the Symbian collapse was bigger than expected, but if Elop could recover to same level of smartphone sales revenues as he inherited when he took over as CEO, then yes, maybe a little bit of pain along the way was ok, if Elop could deliver on the promise of the transition. And while Elop admitted his Burning Platforms memo did damage Nokia Symbian sales, and he admitted being surprised at how big the drop in Symbian sales was, he has repeatedly told us that Elop is satisfied with his Lumia/Windows Phone strategy! Elop has repeatedly said that Nokia was on the right path and he would not alter his strategy. So the above picture is what we must expect from Elop. Anything less than full recovery by Windows of the lost Symbian - is by very definition a failure.

WINDOWS CATASTROPHY

So lets look at how Windows Phone has fulfilled Nokia's new smarpthone sales as this strategy was being implemented. Elop never once said his Windows/Lumkia part of his strategy was failing or disappointing. This is the reality:

That, my dear friends and readers, is a catastrophy. There is no 'rescue' here. This is no 'savior'. This is arriving at a Tsunami wave devastated area, then to discover you now face nuclear contamination as well. This is comprehensive utterly total failure of Elop's promised strategy. The Windows Phone sales are nowhere near restoring Nokia smarpthone sales. Not in the least bit. This is the size of the damage so far:

The new lined part, yellow horizontal lines with the dark blue, is the loss to Windows Phone reality vs Elop's promised strategy. And yes, how big is that loss? So far, since Lumia series was launched, Elop's Strategy promise for Windows and actual sales, has failed to produce 11.1 Billion Euros (14.9 Billion US dollars) of revenues. This strategy has utterly failed also on its second leg. But luckily, there is a solid foundation to this strategy, the featurephones business, which was growing when Elop took over, and when Elop changes the 'smartphone operating system' - that should not in any way harm the sales of Nokia featurephones, that do not use any smartphone OS. So at least part 3 of his strategy was safe. Or was it?

NOKIA FEATUREPHONES SALES FAILURE

Unfortunately, the smartphone end of Nokia handsets is seen as the flagship and premium product, the aspirational side of handset sales. The consumers do not differentiate what is a smarpthone or not, and thus, when the Ratner Effect hit Nokia, where the Nokia CEO bad-mouths his own products (half of the Elop Effect) - that not only damaged Nokia smartphone sales, it also damaged Nokia featurephone sales. This is what happened to the floor of his strategy. It did not hold:

That is a three-leg strategy failing on all three legs. The featurephones business has also experienced severe loss of sales revenues, and the damage achieved by Elop's strategy is worth 8.6 Billion Euros so far (11.6 Billion US dollars). So if you want to see how the floor fell out of this strategy, it looks like this:

So yes, all three legs of the Elop Strategy have failed. What does any sane CEO say when his 3-legged strategy is failing? That he will abandon that strategy, and develop a new one, of course. Not Elop. He promises to give us more of this Microsoftian misery in the years to come. So he promised us this:

And he delivered us this instead:

This is utter comprehensive strategy failure, a three-part strategy that failed on all 3 parts. This strategy has so far wiped out 40.9 Billion Euros (55 Billion US Dollars) and damages Nokia handset sales to the tune of 4.7 Billion Euros more (5.3 Billion US dollars) every quarter Elop is allowed to remain in charge of this mad self-destructive and utterly doomed 'strategy'. Understand, while the global handset industry has doubled in size, Elop has taken the undisputed global giant handset maker, 50% bigger in dumbphones than its nearest rival, 100% bigger in smartphones than its nearest rival - and wiped out 56% of the revenues that Nokia was making (not to mention, plunging the highly profitable smartphone unit into massive losses ever since)

Why is Elop allowed to pursue this doomed strategy? Why is Elop still selling this strategy as a success?What is wrong with Nokia Board that they have not already fired this clown? Why are Nokia shareholders not insisting on firing not only the Nokia CEO but its Board as well. This is a world record in destruciton of a global market leader, fastest collapse of a market leader ever, in any industry.

But yes, this was part 8 in my series. More misery to come, hold on...

February 09, 2013

I was interviewed in Abu Dhabi just now a week ago, when I was doing a keynote to the United Nations sponsored World Summit Awards. The video interview is about Augmented Reality (AR) becoming the 8th Mass Medium. And differing from many of the videos out there of my full presentations, this one is nice and short, about 5 minutes, by Russell Southwood for Smart Monkey TV. Check it out at Tomi Interviewed on Augmented Reality.

February 08, 2013

I'm currently stuck in heavy travel and having limited connectivity. But now that I have a moment (they will call my flight shortly) - I wanted to let my readers and the 'contestants' know, that we have the first of the decisive data points having published. By contestants, I am referring to my Twitter contest over a year ago, to try to guess how Windows Phone will fare globally in the Q4 quarter of 2012. We had entries ranging from selling 0.4% market share to as high as 43.2%. The major industry analyst view at the time in late 2011 when this contest ran, was in the middle teens in terms of market share, so around 15% give or take. My view was that Windows would have less than half that. But yes, here is the full list of all contestants and their entries.

Canalys has published their numbers for Q4 smartphone data. As IDC and Strategy Analytics (both who already released their Q4 data) didn't include any mention of Windows market share in smartphones, we were waiting for the 'official' number for this contest, to come from either or both of Canalys and Gartner. Canalys now gives Windows Phone unit sales in their fresh Q4 numbers - as .... (drumroll) ... (is it 10 Million as some pundits had been pontificating?) ... (drumroll) ... Canalys says.. its 5.1 million. (big sigh of disappointments in Microsoft alternate universe Lalaland..)

5.1 million according to Canalys was 2.4% in Q4. But we are not taking their market share. We take all publsihed Windows numbers in millions, as an average, and then calculate what percent that is, from the larger population of totals reported for Q4, as no doubt all 4 analyst houses will give a total smartphone shipment number (Canalys now just said their calculation is 216.5 million). So the current average, as we await Gartner's number, is 2.3% for Windows Phone. So those whose guesses are close to 2.3% are now in the front seat, this number mathematically cannot any longer go more than a few tenths of a point of percentage up or down, if your guess is between say 1.9% and 2.6%, you are still ok, but for the others? Thanks for playing haha..

I gotta rush now, but yes, Nokia promised us the new Microsoft strategy would result in a 1-to-1 conversion of Nokia's existing Symbian base into Windows. Nokia had 29% at the time. The resulting Windows global market today (of which Nokia only has a slice) is about 2.3%. Wiping out 9 out of every 10 customers you had? That is a world record in failure.

And Windows? Microsoft would be the biggest loser in mobile, yes bigger than Palm, Motorola or RIM/Blackberry, were it not for the even bigger collapse done by Nokia. The two turkeys, Ballmer and Elop, now we know for a fact, marrying two turkeys will not give you an eagle.

Available for Consulting and Speakerships

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Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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